Ripple Cryptocurrency Overview: Principle Of Operation, Difference From Competitors + Prospects in 2019

Hello! In this article we will talk about Ripple cryptocurrency.

Cryptocurrencies - the trend of recent years. They talk a lot about them, people invest money in them, financial giants are looking closely and gradually trying to do what happens if they invest in such an asset. Ripple is the third cryptocurrency in the world. In this article I will tell you in simple language what kind of cryptocurrency, how it originated, why it is needed and what are its prospects.

How did the Ripple cryptocurrency originate

Ripple company was founded in 2004. Then R. Fugger started developing a new payment system that will change the world. In 2005, it appeared, and until 2011 it simply developed, removing bugs, flaws, and trying to compete with giants. But that all changed in 2011. Fugger decides to create his own cryptocurrency, to facilitate and reduce the cost of payments.

This is how XRP and a subsidiary of Ripple Labs appear. The head of the company becomes Chris Larsen.

In 2012, there is a change of values ​​of the company. Instead of creating another payment system, Chris Larsen decides to work in another field. And gradually transfers everything to interbank payments. And until 2014, work continues to improve and optimize transactions.

In 2014, they are starting to pay attention to Ripple. The first bank to start cooperation with the company is German Fidor. And after the signing of the cooperation agreement, Ripple immediately outperformed the 3rd most popular Litecoin cryptocurrency at that time. Further, Western Union takes an active interest in it, and then the Association of Australian Banks joins.

In the wake of Ripple's popularity, in 2017, the global payment system for interbank transfers SWIFT recognizes this cryptocurrency as its main competitor.

From the whole story we see the following: gradually more and more banks are interested in Ripple. More managers understand the advantage of this system over similar means of payment. And with each news that some association of banks joins the system, its value grows. But it still depends on Bitcoin, so this growth will not be long.

How does Ripple differ from its competitors

The main difference between Ripple and other cryptocurrencies is a clear function. Even Bitcoin was conceived as something abstract - either a new payment system, or just a means to facilitate remittances. But in the case of XRP, everything is different. This was originally a project for interbank payments, designed to optimize international payments.

Ripple does not use blockchain technology. Instead of a huge decentralized system, where everything depends on each, the company-developer took all the responsibility. She scattered worldwide gateways through which transactions go. This was done in order to minimize risks and gain complete control over the system.

Ripple - constantly decreasing cryptocurrency. For each operation, a commission is charged, which immediately burns. The commission is small, but if the cryptocurrency gets wide popularity, and everything goes for this, then the number of every second transactions will increase, which means the number of coins will decrease.

Another important feature of XRP is the absence of mining as such. The company-developer initially released to the market 100 billion coins. 35% went to the market, and 65% the company retained. But the company periodically releases new coins to the market, making a profit. And it is likely that in the event of a shortage of coins, they can be re-emit.

Ripple is one of the few useful cryptocurrencies. It facilitates operations in the financial sector, works through gateways, which increases the security and speed of payments, and also does not include mining. And this whole area is managed by one company that is interested in the development of its cryptocurrency.

How Ripple Works

Now let's understand how translations are made in the Ripple network. This is a complex process that employs company servers and gateways connecting servers to external recipients.

In simple words, it looks like this: the bank connects to the system -> gets the opportunity to send money transfers to Ripple -> the client comes and asks to send money to another country -> the bank transfers his money to Ripple -> sends them to another country and the desired bank - > the beneficiary bank converts money into national currency -> credits to the beneficiary's account.

Everything works on the confirmation system. Each transaction is formed in blocks and sent to the servers. All incoming transactions are compared and matched. For the first time - 60%, then - 70%, and so on, until transactions become of the same type. And as soon as the transaction is confirmed, it enters the gateways. And through them there is already a money transfer.

After all confirmations, only those transactions that are officially confirmed remain in the system. This is done to ensure that hackers, even if they intervene in the work, could not conduct unregistered operations. With each confirmation, those transactions that do not find a match in other blocks of information are simply deleted.

Ripple combines all the advantages of Bitcoin and global payment systems. From cryptocurrency, he got a stepped confirmation system, and from payment systems - the ability to exchange currencies in real time and the speed of transfers. From this came out an effective tool for payments.

Why Ripple cryptocurrency is needed

Ripple - a tool to facilitate and reduce the cost of interbank transactions. To transfer money from a bank in one country to a bank in another, you have to do everything through the SWIFT payment system. But due to the need to pay for access to the system, interbank payments through the international system are expensive. The minimum amount of commission for the user is $ 10-15.

Ripple is a solution for interbank transfer problems. By analogy with SWIFT, all banks can connect to Ripple and transfer money to each other. With only one important difference: translations go much faster and cost less. At one transaction through Ripple, the bank saves about $ 3.76. And such transfers - millions per year.

Compared to other payment systems, Ripple is second only to Visa in terms of transfer speed. But the closest competitor - PayPal makes 8 times less transactions per second. The speed of transactions makes Ripple even more interesting for bank transfers. Now you will not have to wait 2-3 days for an interbank transaction. Money comes instantly.

And the last function of Ripple is currency exchange. In online mode, you can change one currency to another, without using third-party services. Exchangers that artificially inflate the rate, too, are gradually becoming a thing of the past.

The currency itself is needed to pay for transactions. Each transfer is charged a commission of 0.00001 XRP (1/50 kopecks, at the last rate). After each transaction, this amount is burned and leaves the system.

Ripple is an effective interbank payment tool. It allows you to reduce the cost of a single operation, secure all interbank payments and speed them up several dozen times. In terms of speed and cost per payment, Ripple is the most effective tool.

Ripple Outlook 2019

While other crypto programmers think about how they can make an alternative to the banking system, Ripple introduces its product and attracts new investors. Among those who are interested in new technologies to improve the banking system, there are:
  • Western Union.
  • National Bank of Canada.
  • Google.
  • UniCredit;
  • SBI (one of the largest holdings in Southeast Asia).
If nothing changes, then many world banks will gradually transfer to Ripple. The currency really simplifies and reduces the cost of interbank settlements, which allows banks to “move” funds faster between customers' accounts.

Investors and speculators do not yet see the potential of Ripple. But as soon as the news comes out that the community of large banks from any European country has switched to this system, there will immediately be people who will start to buy and gradually raise the rate.

From the positive, one can still highlight an increased interest in cryptocurrencies as a whole. Despite the fact that the rate of Bitcoin, and behind it all other currencies, since the beginning of 2018 has fallen more than 5 times, large investors have increased the volume of investments in ICO (preliminary launch of cryptocurrency) 2 times. And this means that fundamental investors like pension funds and large banks that want to keep their money in a promising asset will soon come to the market.

Now a little about the rumors. Nasdaq (a large American stock exchange that sells shares of high-tech companies) plans to launch Bitcoin futures. For those who do not know, futures are securities traded on exchanges. This means that investors are gradually beginning to recognize the cryptocurrency as a whole, and access to the large American BTC exchange in the form of new securities is another step towards strengthening the crypt as a global phenomenon.

The fact of futures release concerns Ripple from two sides at once. The first is to strengthen the position of Bitcoin, and after it - the entire world cryptocurrency. Secondly, according to unverified data, all futures transactions will be carried out using Ripple technology, which will increase its practical value.

From all of the above, a very positive picture may emerge: strengthening the position of cryptocurrency in the world, heightened interest in Ripple, and connecting a growing number of banks to the system of operations. Plus a rumor about calculations through Ripple on the Nasdaq. Perhaps a good future awaits cryptocurrency.

My prediction is: the cryptocurrency boom will not happen again, and everything will develop in its own way. Ripple with its benefits for the banking sector will gradually become more popular. And over time, its value will increase. There will be jumps in the periods when the next association of banks will join the system, but the average annual growth will vary from 20 to 50% per annum.

Ripple - one of the few cryptocurrency, which has found its practical application in the economy. It is promising, brings tangible benefits to those who use it, and promises to grow in value. It is convenient for investors that it costs little, and you can buy it in small lots, waiting for growth.
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